Intel Exec: PC Economics Hitting Digital Home Space

Intel continues to crystallize much of its desktop strategy around a wireless, networked digital home, although a top executive says much integration work needs to be completed by electronics and PC manufacturers.

During a digital home demonstration for reporters at a New York penthouse, Louis Burns, general manager of Intel's Desktop Platforms Group, repeated the themes of his two years of work on the chip maker's digital home strategy: that the market will spur tighter integration of digital images, video, audio and data from a common PC to multiple devices in the home. And, he said, with the emergence of PC companies--including Gateway and Dell--into the home electronics space, the economics of the segment are noticeably changing.

"The PC guys are getting in and doing to the [consumer-electronics] space what they did to PC economics," Burns said, noting that PC makers are bringing "high-velocity, high-volume," price-sensitive models into what had previously been a higher-cost arena.

Lower-cost digital home technology, Burns said, is creating a ripple effect. As costs are driven down and volumes are driven up, "that's when the content guys see the opportunity."

Burns said the first changes began a year ago, when Gateway offered large-screen, plasma displays for $2,999--a steep discount from what had been a $5,000 product offered by other vendors.

The entry of Dell into the space is showing signs that pricing in the large-screen, LCD-TV space will spiral further.

Intel, Santa Clara, Calif., is increasingly painting a PC strategy that splits into two paths: an integrated digital, home solution for the consumer space, and a mobile, notebook-based solution for the commercial arena. In both settings, Intel will increasingly push wireless technologies to fully leverage each configuration.

During the demonstration, Burns acknowledged that missing pieces of the digital home strategy include security, networking standards for the new and emerging media devices, and digital rights management.

On security issues for the digital, wireless home, Burns said, Intel is talking with companies such as Norton to address firewall compatibility and ease-of-use issues that at times plague novices and lead help-desk services at component providers to give bad advice to end users.

"It's not acceptable for people like Linksys to say, 'Turn your firewall off,'" Burns said.

During the event, Burns walked reporters through a series of configurations, including a digital bedroom with movies and audio streamed from a PC to an LCD-TV via a wireless digital media adapter (DMA); a teenager's office, with a PC, DVD player, music streamer and LCD integrated into a single Gateway 610 Media Center desktop; and a digital living room with a Gateway, large-screen plasma LCD-TV integrated with streaming audio, video and IP services.

Burns suggested Intel could have several significant technology announcements at the upcoming CES electronics conference in Las Vegas, though no details were immediately offered.